Bank of Ireland has agreed to compensate victims of a recent phishing scam, backtracking from its earlier position.

The bank had initially refused to refund victims, who lost about €160,000 to scammers after receiving fake emails. However, reports in the Irish Independent on Tuesday suggest the bank has had a change of heart.

For its part Bank of Ireland has refused to comment on the cases, releasing a general statement on phishing instead.

It said: "Bank of Ireland is aware that there are fraudulent emails being circulated purporting to be from Bank of Ireland 365 online. Bank of Ireland can not discuss individual cases where a customer has received and responded to such an email."

The nine customers who were conned out of the cash had threatened to sue the bank for compensation if their money wasn't returned. But now experts fear there could be a surge in phishing cases, encouraged by the compensation paid out by Bank of Ireland.

Conor Flynn, technical director of Rits, said the move was essentially a goodwill gesture by the bank. However, he warned that people may feel less threatened by phishing scams in future as a result: "It certainly will not help things. People will feel they have a buffer of security."

However, he also said banks may implement more technologies that will push the responsibility back on to the customers to safeguard their details and prove they didn't reveal their confidential details to a third party.

He added: "It's not a victimless crime. Banks still have to record record-profits. If they lose cash through compensating phishing victims, bank customers will pay."